The Institute of Chartered Accountants of Sri Lanka

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1 The Institute of Chartered Accountants of Sri Lanka Postgraduate Diploma in Business Finance and Strategy Quantitative Methods for Business Studies Handout 01: Basic Statistics Statistics The statistical methods concerned with, 1. Collection of data. 2. Organization and classification of data. 3. Presentation of data. 4. Analysis of data. 5. Interpretation of data. Statistical methods can be categorized into two major areas as; - Descriptive statistics - Inferential statistics (Analytical statistics) Descriptive statistics :- The study of how data can be summarized efficiently to describe the important aspects of large data sets. Further this deals with method of collecting and describing set of data. Inferential statistics:- This is concerned with making forecasts, estimates, or judgments about the larger group from the smaller group actually observed. Data vs Information Data are the facts and statistics collected in the raw form for reference or analysis whereas information is processed data. [1]

2 Data Data are the numerical results of any scientific measurement. It is a information present in raw form for further usage (raw data). This may be present in an unorganized manner which may make no sense at all until organized properly. Information Information is processed data. Information is meaningful, relevant and helps the user develop an understanding of the data that did not provide any coherence or certainty in what it represented. Types of Data Data are the results of any scientific measurement Quantitatively and Qualitatively Quantitative data can be directly use in analyzing since it is numerical in nature. Qualitative data should be converted to numerical nature by assigning scales. 1. Nominal Scale A nominal scale consist of mutually exclusive categories in which no logical order is implied. eg. Foreign students in a university 2. Ordinal Scale:- An ordinal scale consist of distinct categories in which order is implied. eg. Students performance order. 3. Interval scale:- An interval scale is a set of numerical measurements in which the distance between numbers is of a known, constant size. 4. Ratio Scale:- Measurements are compared without showing the absolute values. Variables :- A variable is any characteristic which can assume different values. eg. Age, height, marks, turnover, cost of sales, etc. There are two types of variables. 1. Discrete variables:- A discrete variable takes whole number values and consist of distinct, recognizable, individual elements that can be counted. 2

3 2. Continuous variables:- A continuous variable is a variable whose values can theoretically take on an infinite number of values with in a given range of values. Primary Data:- Primary data are collected specifically for the analysis desired. Methods of collecting primary data include personal investigation, teams of investigators and through questionnaires etc. Secondary Data : - Secondary data are data that were originally collected as primary data for one purpose, or for general use, but are now being used for another purpose. Eg. The Central bank periodically collects economic data. Such data are primary for Central bank, however if we use such data then it is called as secondary data. Populations :- A population in statistical terms, is the totality of things under consideration. It is the collection of all members of a specified group. Any descriptive measure of a population characteristic is called a parameter such as mean variance etc. Sample :- A sample is the portion of the population that is considered for the analysis. It is the group of items selected from the population for the purpose of getting information about the characteristics of the items of that population. Sample investigation :- Even if it is possible to observe all the members of a population, it is often too expensive in money and or time consuming. 3

4 Eg. If the population is all telecommunications customers island wide and an analyst is interested in their affordability, he will find it too costly to observe the entire population. Sample statistics is used to estimate an unknown p Methods of Collecting Data Methods of Data Collection There are four main methods of data collection. Census. A census is a study that obtains data from every member of a population. In most studies, a census is not practical, because of the cost and/or time required. Sample survey. A sample survey is a study that obtains data from a subset of a population, in order to estimate population attributes. Experiment. An experiment is a controlled study in which the researcher attempts to understand cause-and-effect relationships. Observational study. Like experiments, observational studies attempt to gather data from directly observing a particular event. Both in Census and Sample survey data are collected by way of Interviews 1. Face -to -face interviews have a distinct advantage of enabling the enumerator to establish relationship with potential participants and therefore gain their cooperation. These interviews yield highest response rates in a survey. They also allow the researcher to clarify ambiguous answers and when appropriate, seek follow-up information. Disadvantages include impractical when large samples are involved time consuming and expensive. Further some people deliberately provide wrong answers or sometimes they may forget the information. 4

5 2. Telephone interviews are less time consuming and less expensive and the enumerator has ready access to anyone on the planet who has a telephone. Disadvantages are that the response rate is not as high as the face-to- face interview but considerably higher than the mailed questionnaire. 3. Computer Assisted Personal Interviewing (CAPI): is a form of personal interviewing, but instead of completing a questionnaire, the interviewer brings along a laptop or hand-held computer to enter the information directly into the database. This method saves time involved in processing the data, as well as saving the interviewer from carrying around hundreds of questionnaires. However, this type of data collection method can be expensive to set up and requires that interviewers have computer and typing skills. Other Methods of Data Collection When data is collected by another person or from another report, it comes under the category of secondary data, and therefore this must be done after external consideration. Surfing web, using research papers, magazines etc. are considered as other methods. 5

e-learning Student Guide

e-learning Student Guide Basic Statistics Student Guide Copyright TQG - 2004 Page 1 of 16 The material in this guide was written as a supplement for use with the Basic Statistics e-learning curriculum